On May 21, the House Financial Services’ Subcommittee on Financial Institutions and Consumer Credit (Chairwoman Shelley Moore Capito, R-WV) held a legislative hearing entitled “Legislative Proposals to Improve Transparency and Accountability at the Consumer Financial Protection Bureau (CFPB).” The hearing focused on eleven separate Republican proposals that would seek to curtail the CFPB’s powers and increase Congressional oversight over the agency
The following legislative proposals were examined:
- H.R. 3389, the CFPB Slush Fund Elimination Act of 2013 (Capito R-WV) – Eliminates the CFPB’s Civil Penalty Fund and require the CFPB to transfer all proceeds from fines it collects to Treasury;
- H.R. 3770, the CFPB-IG Act of 2013 (Stivers R-OH) – Removes the Federal Reserve Systems Inspector General (IG) from the CFPB and creates a new IG for the Bureau.
- H.R. 4262, the Bureau Advisory Commission Transparency Act (Duffy R-WI) – Requires that the CFPB's Consumer Advisory Committee’s meeting be open to the public in accordance with the Federal Advisory Committee Act (P.L. 92-463);
- H.R. 4383, the Bureau of Consumer Financial Protection Small Business Advisory Board Act (Pittenger R-NC) - Creates a small business advisory board at the CFPB composed of at least twelve members from the financial services industry that are appointed by the CFPB director;
- H.R. 4539, the Bureau Research Transparency Act (Fitzpatrick R-PA) - Requires that all studies, data and analyses that are used in any CFPB report be made available to the public;
- H.R. 4604, the CFPB Data Collection Security Act (Westmoreland R-LA) - Creates an opt-out list for consumers who do not want the CFPB to collect their personal information;
- H.R. 4662, the Bureau Advisory Opinion Act (Posey R-FL) – Allows business to submit inquiries regarding consumer financial law and receive a confidential advisory opinion from the Bureau;
- Discussion Draft of the Bureau Arbitration Fairness Act (McHenry R-NC) – Repeals CFPB’s power to prohibit the use of arbitration to resolve disputes in regards to financial products;
- Discussion Draft of the Bureau Guidance Transparency Act (Stutzman R-IN) - Requires the CFPB to provide public notice and a comment period before it issues any guidance in its final form;
- Discussion Draft of the Preventing Regulatory Abuse Act of 2014 (Barr R-KY) - Requires the CFPB to create a formal rule outlining the definition of “abusive” act or practice; and
- Discussion Draft of the Bureau Examination Fairness Act (Mulvaney R-SC) – Restricts CFPB’s examination process by prohibiting enforcement attorneys in examinations, placing time limits on examinations and regulating data requests by the CFPB.
Witnesses testifying before the Committee included business leaders, academic professionals and consumer advocates. In his opening statement on behalf of the U.S. Chamber of Commerce, Andrew Pincus stated that while the creation of the CFPB was a good thing for the business community, that the “uniquely unaccountable structure of the CFPB make[s] it necessary for Congress to improve transparency and accountability at the Bureau.” Pincus said that Congress needs to work to on creating the same level of transparency that is in place at other federal agencies like the Federal Trade Commission (FTC) and the Federal Housing Finance Agency (FHFA). In defense of the CFPB, Ed Mierzwinski from the United States Public Interest Research Group (U.S. PIRG) urged the Subcommittee to hold a hearing in the future about the achievements of CFPB, citing CFPB’s successful work with military families and financial literacy programs.
Since being created by the Dodd-Frank Act in 2010, House Republicans have proposed numerous legislative reforms aimed at curbing the power of the CFPB and giving Congress more oversight over the Bureau. These include replacing the CFPB director with a five panel commission and making the CFPB’s budget subject to the annual Congressional appropriations process. Such proposals have passed the House floor on partisan votes but remain dead-on-arrival in the Democratic controlled Senate. However, with Republicans’ prospects of winning the Senate in November growing, the chances of legislation reforming the CFPB passing Congress increases. Although Republicans remain unlikely to have a filibuster-proof majority in the Senate to pass major CFPB reform, it appears clear a Republican-controlled Congress will still aggressively seek to reform the CFPB. Even though President Obama would likely veto legislation that would weaken the CFPB, a Republican-led House and Senate would be in a position to approve certain CFPB reform bills down the road and look for opportunities to attach them to pieces of must-pass legislation.